|| SHANIWAR SAMWAD || 13-11-2021

 Just before Diwali, the government announced the reduction in the excise duty on petro products. Followed by the reduction in state VAT in some 22 odd state governments. Other or remaining  state governments will follow the same path going forward its only option they have

There is a silver line in the above, first time without any fanfare government recognized the inherent strength of the economy. It is important because the pandemic has damaged the economy very badly. Though we are the fastest growing economy in the world

This time all our micro and macro indicators are in positive territory. But we are going to discuss the reforms in the energy basket. The energy basket is not only oil and gas but electric energy is also part

If we see the overall situation then there is no transparency in any of the above-said items be the pricing or distribution As the government is the only major player or one can say a dominant player in oil.

We will discuss one by one, in the oil sector government owns all major firms in the upstream and downstream sectors. In an exploration of oil and gas private players are allowed, but the gives its company on nomination basis, instead, if they have to compete with private or multinational for same the will give them the advantage in the global play.

In the retail sale of the oil sector, the dominant players are government sector companies. There is no competition in the market, as in early private player has to close her operation due to the government action.

Here, the prices are freed from government subsidies, but there is no competition. Even for bulk purchasers, there is no competition.

The same is a story in power distribution, the method of costing or which way cost is calculated is not simple, the system is opaque.

In both, the government has the upper hand as compared to other players.

The calculation of tax is so complicated that the actual cost does not visible to an ordinary person.

A there simple solution for the same Bringing it into the GST regime and the government becoming an enabler than the operator.

There is predictability in the regime as prices of oil and gas are moving as per the market not as per the government plan. But the government-owned enterprises do not take or are not allowed to take decisions as per need of the market or play freely or get the upper hand in the government purchase over private players.

In the power sector, there is no competition for anybody, the final say is with the government. Even after open access is allowed as per the electricity act 2003, the final say is with the government-owned distributor.

Both can be given the freedom to operate and compete with the market players. As we have seen in the telecom sector, where government players are not in the picture even after getting all support from the government,

We have to wait for all reforms to conclude, as the direction is the same as we are thinking but the pace is slow as compared to other reforms. The inflation will come down  So our global competitiveness.